There will come a time when even the most profitable companies will need financing. This may be to complete an acquisition, expand, or launch new product lines.
However, traditional financial institutions can be very protective, and your company may need to look for different methods. In this article, we discuss three viable alternative financing methods for your company.
Crowdfunding
Crowdfunding has been around for a while, in one form or another. It involves collecting small donations from a large group of people, which are then used to fund a project. In return, the people who invest typically get something in the form of a product or service. While it’s a way for artists and creatives to generate revenue, it’s only recently become more widely accepted in the business world.
This concept emerged after the financial crisis of 2008 and is a true digital medium. By spreading the word on social media and the internet, you can tap into the global interest in your products. It’s a lot like buying shares in a company, except buyers may get something other than profit like the final product.
Online horse racing syndicates are prime examples of companies that have switched to this model. In the past, these companies were the preserve of the wealthy, Horse racing stocks are now accessible. Through a range of price entry points. The digital infrastructure means that owners don’t have to be in the UK but can come from all over the world. They buy the horse, then share the profits they make, much like a crowdfunding model.
Bill discounting
Invoice discounting is a way to improve cash flow and add stability by selling outstanding invoices to a third party. When you issue an invoice for goods or services, unpaid invoices can build up in arrears. The company will give you the bulk of the amount owed when it buys from you, usually around 80% to 90%. The company will then pay you the rest of the amount and claim its fees once it receives full payment.
It’s just a good way to get money. If you have a lot of outstanding billsIf your cash flow is constrained by this, it prevents you from having to chase them all down. It’s useful for a short-term bridge if you need to pay your bills and it’s much cheaper than a loan. However, it does have its drawbacks, especially if clients don’t pay and you lose money. Many of them may not be happy with you selling the invoices to a third party.
Equipment Financing
Equipment financing is a good option. If you want a loan to buy machinery Or equipment. Then you pay for it in monthly installments, just like a traditional financing agreement. The equipment is used as collateral, so if you don’t pay, they get it back. It’s used by many businesses that need large items, like construction and agriculture, but it can be used by other types of businesses.
These are all very diverse methods, but one of them should be right for your business. They often have better interest rates than bank loans, which can have higher interest rates if you have been denied access to them in the past. Check your financial situation, see how much you need and what is the best option for your business.
Comments are closed, but trackbacks and pingbacks are open.